US data lackluster; drought effects bite in beef markets; China plays with fire over restructuring plans; Aussie drought shift; global air cargo up; UST 10yr 4.53%; gold and oil down again; NZ$1 = 59.3 USc; TWI-5 = 69

Here's our summary of key economic events overnight that affect New Zealand, with news there is little evidence the global economy is on the rise. Bond markets don't think so.

But first, last week there was a rare rise in American mortgage applications, now off a lower base however, but also helped by sharply lower mortgage interest rates. Their benchmark 30 year fixed rate fell to 7.61% plus points, a retreat from 7.86% and the largest fall since July 2022. Of course, they are following the US Treasury rates lower.

American consumer credit levels rose in September from August, but really only back to where they were in July. But they are up +9.0% in a year.

American beef prices are rising, and sharply, as drought threatens cattle herds. Although this is not strictly 'news' - the trend has been around for a year - the drought slaughter in the southwest is ending and the overall US herd is much smaller now. Imports will be benefiting significantly now.

Canadian building consents recorded a very sharp -6.5% fall in September, much more than expected. Much of that was a base effect of unusually large non-residential projects being approved a year ago. But the value of residential consents rose +4.3% from August and were +2.3% higher than a year ago. The residential consent levels are especially strong in Vancouver.

In China, concern about the country’s lackluster economy and troubled property market has led to rising discontent among citizens, a new study shows.

And Beijing is about to make a classic mistake in its efforts to stave off a Country Garden bankruptcy. The giant real estate developer has avoided a complete collapse but is on its last legs. In desperation, Beijing as now ordered insurer Pin Ang to "invest" to save it. One huge zombie could now well infect a healthy company. This is an example of Xi's acolytes being very light on basic economic or business experience. The consequences could be wide, especially if Country Garden does linger on and avoid its 'creative destruction' - which will invite a repeat of the technique.

Meanwhile, their central bank said it will provide emergency liquidity to regions with heavy debt as necessary to help local governments resolve debt risks. Again, more debt to resolve unsustainable debt issues.

In the EU, retail sales volumes slipped again in September to be -2.7% lower in a year. Euro area levels were weaker than the overall EU levels.

In Australia, they had their driest October since 2002 due to El Nino. Rainfall was -65% below the 1961–1990 average.

And staying in Australia, the mammoth Optus outage, one made worse because networks there don't 'share' when they have major issues like this, is being forensically examined for the cause. It is likely they accidentally misconfigured its own BGP routers; whether someone else did it accidentally, or whether someone else did it deliberately, remains to be seen. It’s also not yet clear whether Optus’ BGP issues are the cause of its outage, or a symptom of some other problem.

Globally, September air cargo traffic was up +1.6% from the same month ago, and the fastest growing region was the Asia/Pacific region (+4.2). But the overall levels arte still -1.8% lower than in September 2019, and -3.2% lower in the Asia/Pacific.

The UST 10yr yield is down from yesterday as bond prices rise again, now at 4.53% and a drop of another -4 bps. And their key 2-10 yield curve is more inverted, now by -38 bps. Their 1-5 curve is now inverted by -82 bps and that is a little more. Their 3 mth-10yr curve inversion is now -85 bps and also more than yesterday. The Australian 10 year bond yield is now at 4.52% and down another sharp -10 bps from yesterday. The China 10 year bond rate is unchanged at 2.68%. The NZ Government 10 year bond rate is much lower at 5.21%, down -11 bps.

Wall Street has opened modestly lower with the S&P500 down -0.2% in its Wednesday trade. Overnight European markets closed +0.6% higher, except London which was down -0.1%. Yesterday Tokyo ended its Wednesday session down -0.3%. Hong Kong ended down -0.6%, and Shanghai was down -0.2. The ASX200 ended its Wednesday session up +0.3%, while the NZX50 fell -0.7%.

The price of gold will start today at US$1954/oz and down another -US$10/oz from this time yesterday.

Oil prices have fallen again overnight, down another -US$2.50 to be just over US$75.50/bbl in the US. The international Brent price is down more, now just under US$78/bbl. These are three and a half month lows.

The Kiwi dollar starts today at 59.3 USc and unchanged from this time yesterday. Against the Aussie we are also unchanged at 92.3 AUc. Against the euro we are a little lower at 55.3 euro cents. That all means our TWI-5 starts today at just on at 69, and also little-changed.

The bitcoin price starts today at US$35,427 and up +2.2% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.9%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».